I feel like the voice crying in the wilderness. I have been writing about government debt, both in the United States and in Australia, for a long time because I think it is one of the most important and the most ignored political, economic and moral problems of our time. The addiction to spending more money than you have is impoverishing the future generations at the expense of those living today; it’s literally stealing from our children. Borrowing is the easiest option for governments as it absolves them from making tough decisions about cutting spending or increasing taxation to make the books balance. It’s a cowardly option, and it has been pursued by governments of all political persuasions over the recent years. For a long time, the right side of politics by and large at least in theory stood for a smaller government, lower taxes and sound government finances, thus representing the views of a plurality of the electorate who expected governments to maintain the same discipline as ordinary people had to in real life in order to survive and thrive. Sometime around the time of the Global Financial Crisis there has been a sudden and catastrophic shift in public and political sentiment away from fiscal rectitude towards reckless indifference. Social democrats have never cared about government debt – it is a structural feature of their Ponzi economics – but for the conservatives to abandon the field in this battle of ideas is unexpected, unexplained and unforgivable.
Hence I read stories like this and weep:
Within a decade, more than $900 billion in interest payments will be due annually, easily outpacing spending on myriad other programs. Already the fastest-growing major government expense, the cost of interest is on track to hit $390 billion next year, nearly 50 percent more than in 2017, according to the Congressional Budget Office…
The deficit is expected to total nearly $1 trillion next year — the first time it has been that big since 2012, when the economy was still struggling to recover from the financial crisis and interest rates were near zero…
Interest payments will make up 13 percent of the federal budget a decade from now, surpassing spending on Medicaid and defense.
Finding the money to pay investors who hold government debt will crimp other parts of the budget. In a decade, interest on the debt will eat up 13 percent of government spending, up from 6.6 percent in 2017.
And what’s worse, there is nothing to show for it – it’s borrowing money for recurrent expenditure, not for any long term investments, such as infrastructure or science and research, which will pay future dividends. It’s an equivalent of a family borrowing money from a bank to pay for food and holidays instead of a mortgage on a house – and doing it indefinitely. The left always comes up with the true and tested demand that “the rich should pay more”. Forgetting for the moment that it’s the rich (and the upper middle class) who pretty much already pay all the taxes, there just aren’t that many “rich” to pay for government overspending. Increase their taxes – increase them to 100% of their income – or go further and confiscate all their wealth and see how long it takes the government to chew through it. The problem is not that the rich are not paying their fair share; it’s that the government is spending more than its fair share.